A pre-foreclosure is a property on which the owner is behind on his mortgage payments and is at risk of losing it. The loan is already listed in public records as in danger of default, and the lender may soon take possession of the property.
During the pre-foreclosure process, the homeowner can still sell the house at a price agreed upon by the seller and buyer and approved by the lender. The owners are typically motivated to sell at reasonable offers to avoid credit damage, so potential buyers get a much better deal. The property is sold "as is" in most cases.